Is it a Good Time to Invest in Commodities?

Jared Kizer explores the potential benefits and disadvantages when investing in commodities and how they can open your portfolio to more sectors including energy, industrial metals, precious metals, livestock and grains.

While investors may be familiar with direct ownership of commodities like gold and other precious metals, investing in them through financial markets offers a wider range of diversification for your portfolio. In this episode of Buckingham Perspectives, Head of Investment Research Jared Kizer explores the potential benefits and disadvantages when investing in commodities and how they can open your portfolio to more sectors including energy, industrial metals, precious metals, livestock and grains.

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.

2024 Planning Considerations and Strategies for Individual Taxpayers

They say hindsight is 20/20, but tax planning shouldn’t simply be based on what has worked in the past. Upcoming life changes and external factors such as tax policy developments also deserve attention and may offer money-saving opportunities. With that in mind, here are several of the most important tax-planning considerations and deadlines to remember as we move into 2024.

Key Dates and Deadlines
April 1, 2024 – Deadline to take your first required minimum distribution (RMD).The age at which one must begin taking RMDs depends on their birth year. SECURE Act 2.0, which passed on Dec. 22, 2022, pushed back the RMD starting age to 73 from 72, beginning Jan. 1, 2023. The starting age will increase again, to 75, in 2033.If you were born in 1950 or earlier, you will need to start taking RMDs as previously scheduled.If you were born between 1951 and 1959, you will need to start taking RMDs at age 73.If you were born in 1960 or later, you will need to start taking RMDs at age 75.
April 15, 2024 – Taxes are due (unless extended due to a local state holiday).First-quarter estimated tax payment is due using Form 1040-ES.Deadline for making IRA and HSA contributions that can count toward 2023.Deadline to file for an extension using Form 4868.
June 15, 2024 – Second-quarter estimated tax payment is due using Form 1040-ES.Sept. 15, 2024 – Third-quarter estimated tax payment is due using Form 1040-ES.
Oct. 15, 2024 – Last day to file your extended tax return.
Dec. 31, 2024 – Deadline to timely take RMDs.
Jan. 15, 2025 – Fourth-quarter estimated tax payment is due using Form 1040-ES.

IRS Inflation Adjustments
The IRS makes inflation adjustments annually, and the increases have two purposes:

  1. To prevent tax bracket creep for those whose income keeps pace with inflation.
  2. To limit government revenue increases resulting from inflation.

Since the 1980s, the adjustment amounts have stayed within relatively predictable ranges. However, as inflation soared between 2021 and 2022, the 2023 adjustments represented the sharpest increase in nearly four decades. Even so, many families still had less inflation-adjusted net income going into 2023. Fortunately, inflationary pressures are easing. For the 12-month period through September 2023, inflation increased 3.7%, reflecting a significant decline from 7.8% during the previous period. However, when it comes to inflation and taxes, many planning strategies remain unchanged as we head into 2024.

For a more detailed breakdown of these adjustments, download our 2024 Tax Guide.

Selection of IRS Inflation Adjustments

2024 Tax Planning Considerations
Standard Deduction
In 2017, the Tax Cuts and Jobs Act significantly increased the standard deduction amounts, making it unnecessary for many taxpayers to itemize. If this is the case for you, then strategically managing adjustable below-the-line deductions (charitable contributions, payments of state and local taxes, medical expenses, etc.) to maximize itemization may not be necessary. It also highlights the importance of effectively managing above-the-line deductions, which can be taken regardless of whether someone uses the standard deduction or itemizes. These include deductions for items such as a traditional IRA or HSA contributions, student loan interest and self-employed retirement contributions, among others.

Tax Brackets
It’s important to review whether the new tax brackets will give you enough room to remain in the bracket you were in for 2023 or whether adjustments should be made. By reviewing this early in the year, you can determine whether additional tax-reduction strategies could further reduce income so that you remain in the same bracket.

Long-Term Capital Gains Brackets
Long-term capital gains on investments receive advantageous tax treatment that you may benefit from. Proper planning can reveal opportunities and help prevent the following undesirable consequences:

  • Unless necessary, hold appreciated investment assets for at least a year before selling. Doing so earlier will result in them being taxed at ordinary income rates, which are higher than capital gains rates.
  • Consider whether you may be subject to an additional net investment income tax (NIIT) of 3.8%. This tax impacts investment income for single filers with modified adjusted income (MAGI) exceeding $200,000, and joint filers with MAGI exceeding $250,000. If this is a possibility for you, your advisor and tax professional can help review the consequences in more depth.
  • Account for asset location in your overall investment asset tax planning. If you have investment accounts with different types of tax treatment (e.g., taxable, tax-deferred and tax-free), strategically placing certain investments in certain accounts can help you significantly reduce the long-term impact of taxes on your portfolio.

Tax-Advantaged Accounts
It’s important to maximize available tax-advantaged options, such as retirement accounts and HSA plans. As previously mentioned, contributions to many of these accounts are eligible for an above-the-line deduction that taxpayers can take whether they itemize or not. Not only do they help save on tax payments today, but they also provide ongoing tax benefits in the form of tax deferral. Planning early can allow you to spread those contributions out over the year as opposed to potential last-minute large sums to help reduce taxes.

It is also advantageous to take a long-term view of tax deferral. It can be tempting to defer as much as possible to lower taxes today. But doing so could have adverse effects on tax payments in the future. The tax consequences for when the money is distributed should be considered. The decision to pay more taxes today could even come in the form of making non-deductible Roth IRA contributions (for those who qualify), or by converting tax-deferred accounts into a Roth IRA to allow for tax-free growth.

Other Inflation Adjustments
This article only outlines some of the key items that were adjusted for inflation. Depending on your situation, you may want to explore others, such as the foreign earned income exclusiongift tax exclusion or qualified adoption expenses. To ensure you are taking full advantage of the opportunities available, speak with your financial advisor to discuss which inflation adjustments would be most relevant to your circumstances as you begin tax planning for 2024.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Individuals should speak with a qualified tax professional based on their own circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-23-6516

Is the 60/40 Portfolio Dead?

A recent Wall Street Journal article questioned whether investors should continue using the traditional 60/40 portfolio: a mix of 60% U.S. stocks and 40% bonds. In this episode of Buckingham Perspectives, Chief Investment Officer Kevin Grogan covers the current state of the 60/40 portfolio, reviews historical and forward-looking returns, and concludes the 60/40 portfolio is not dead, though some investors might want to consider a modest allocation to alternatives to diversify their portfolio. 

If you have any questions please feel free to drop us a note.

Source: Wall Street Journal

How Could Rising Geopolitical Risks Affect the Markets?

As concerns rise about the conflict in the Middle East, investors are asking what the impact could be on financial markets, especially if tensions escalate further and for a prolonged period.

While no one knows for certain how the crisis could evolve, reviewing similar events in history may help investors assess the potential impact on their portfolio. In this episode of Buckingham Perspectives, Head of Investment Research Jared Kizer addresses investors’ concerns about geopolitical risks and shares insights on making portfolio adjustments based on these events.

Social Security and Medicare: How to Plan for Next Year

Each October, the Social Security Administration (SSA) announces how much, if any, benefit increase Social Security recipients will receive the following January, depending on the rate of inflation. As the 2024 increase is set to be less than that announced for 2023, retirees may be wondering what impact the Social Security adjustment will have on their Medicare costs next year. Here are some commonly asked questions about the changes coming, as well as tips to keep your Medicare costs lower, regardless of how much your Social Security benefits rise.

What is the COLA for 2024?

The cost-of-living adjustment (COLA) for 2024 is 3.2%, which the SSA estimates will raise the average monthly retirement benefit by about $59, to $1,906. Those currently receiving benefits should receive notification of their increase via their online Social Security account before the end of December and will receive the increased amount beginning in January. While this increase is considerably less than the 8.7% bump for 2023, which made plenty of headlines when announced last year, it is still higher than the 2.6% average over the past 20 years.

Will the COLA be enough to offset an increase in Medicare costs?

Medicare Part B and Part D are the coverage options most susceptible to annual changes in costs. Medicare Part B covers medical services like doctors’ visits and outpatient care while Part D covers your prescription drugs. It’s generally best to have Part D coverage as well, especially as you age and may require specific medications.

The SSA typically deducts Medicare Part B premiums from Social Security benefits, so as many recipients know, the financial impact from an increase in Social Security benefits may be muted. While there have been years in which Part B premiums remained unchanged from year to year, in 2023, the standard premiums decreased for the first time in over a decade, which allowed recipients to benefit more from the 8.7% COLA. This year, the Centers for Medicare & Medicaid Services (CMS) announced 2024 Part B premiums earlier than anticipated. The standard premium will increase next year by $9.80 to $174.70. This is lower than some feared and means Social Security recipients whose Part B premiums are deducted from their monthly benefits can still expect some increase in income next year given the recently announced COLA.

How else might my Social Security benefits affect Medicare costs?

It’s important to consider that an increase in Social Security payments could actually raise your Medicare costs if it pushes you into a higher income threshold. That’s because your income can affect your Medicare premiums for Part B and Part D coverage. People with high incomes (over $97,000 for a single individual and over $194,000 for a married couple in 2023) pay higher premiums for Part B and Part D.

If you earn over the income thresholds, which are announced annually, you’ll pay an income-related monthly adjusted amount (IRMAA) – a surcharge added to the Part B and Part D premiums. If your income is slightly below the tier, the increase you receive in Social Security income may push you over that threshold, causing you to pay a higher amount for both Part B and Part D benefits. Based on the recently announced changes for 2024, the tables below indicate how your income level can affect your Medicare Part B and D premiums.

Medicare premiums are based on a two-year lookback framework, meaning Social Security reviews your tax return from two years prior. Therefore, for 2024 rates, Social Security will use your 2022 federal tax return to determine which of the tiers you fall under.

Medicare Part B income-related monthly adjustment amounts for 2024:

Medicare Part D income-related monthly adjustment amounts for 2024:

Strategies to keep Medicare costs under control

To prevent your Medicare premiums from rising based on a change in income, it’s best to consult a team of financial professionals who can help apply tax strategies that include being mindful of IRMAA. We also recommend reviewing your Part D plan annually to ensure it meets your specific needs. Even if your medications stay the same, individual plans may adjust their prescription costs, preferred pharmacies or the drugs they cover, so it can be helpful to review this with your financial advisor each year.

Legislative changes stemming from the Inflation Reduction Act of 2022 should also help reduce health care costs for Medicare recipients. One particularly impactful change that should help Medicare Part D recipients save money is the elimination of the donut hole, a coverage gap in which individuals are not covered for their prescription costs and must pay out of pocket. This change will cap overall Medicare Part D costs at $2,000 annually per individualstarting in 2025.

Another change to Medicare Part D plans that went into effect in 2023 relates to insulin-related costs. For those on Medicare, the cost is now limited to a maximum copay of $35 per month. This should provide savings for insulin-dependent diabetics who have grappled with the rising costs of this medication over the last decade or two.

Your financial advisor can help

Historically, Medicare premiums have risen faster than Social Security COLAs. However, when factoring in the upcoming legislative changes to Medicare benefits, as well as incorporating health care planning with your financial advisor, there are plenty of strategies to reduce your Medicare costs that can lead to significant savings over the long term.

The above considerations are just a handful of ways a financial advisor can help review your Social Security benefits and suggest strategies to lower Medicare costs. Please reach out to your advisor to discuss the best options for your situation. If you are not presently working with one, we would love to help you. Please schedule a short phone call or virtual conversation with our team.

Steve Weiss, CFP®

Steve Weiss is a seasoned wealth advisor with a passion for empowering others through financial knowledge. Using a client-centered approach, Steve takes the time to meet his clients where they are in life, understanding their unique needs and concerns, whether they are planning for retirement or facing other financial decisions in the near future. Additionally, Steve’s understanding of Social Security matters has made him an invaluable resource for clients.

Angela Muckler
As an Associate Regional Director, Angela is dedicated to providing support to advisors and their teams in various aspects of their business. Her goal is to build a strong relationship with every individual she works with, better understand the challenges they face and look for opportunities to help them grow. Angela’s passion for comprehensive financial planning and problem solving enhances her ability to connect firms with resources that ultimately help their clients.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data information and may become outdated or otherwise superseded without notice. Individuals should speak with a qualified financial professional based on their circumstances. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information. R-23-6359

The Rise of the Female Breadwinner: Key Planning Tips and Considerations

Over the past several decades, women have increasingly taken on the responsibility as their family’s primary or sole breadwinner. This rising role has prompted a different approach to comprehensive financial guidance. Wealth Advisor Alyssum Malone, CFP®, BFA™ shares how partnering with a professional can help ensure your family’s finances are protected for years to come, no matter what situation may arise.

Women as Breadwinner

For much of the past century, men have customarily been the breadwinner in most families. However, over a dynamic era of progress spanning the past several decades, the role of women as financial providers has significantly increased. In fact, it’s becoming more common for women to be the primary or sole wealth contributor in their family. These powerful statistics illustrate this growing trend:

  • 16% of married couples now have a woman who earns more than her spouse, up threefold from the 1970s, according to Pew Research.
  • In 40% of families with children under 18, the mother is the primary breadwinner, according to Pew Research.
  • As women currently outnumber men almost 3 to 2 on college campuses, the number of female breadwinners is likely to increase in the future, according to the National Student Clearinghouse.

The rising role of women as providers has prompted a different approach to comprehensive financial guidance. Utilizing the resources and experience of a financial professional is a great starting point to ensure long-term security for your whole family.

How can partnering with a wealth advisor help?

Managing finances is often a stressful and time-consuming task. Partnering with a financial planner takes more things off your to-do list. While getting time back in your busy schedule is invaluable, the peace of mind knowing your money is being managed by a professional is arguably one of the most valuable benefits of working with a wealth advisor. A recent study by the Life Insurance Marketing and Research Association (LIMRA) revealed that 40% of women respondents working with an advisor feel “very prepared” for retirement versus 27% of respondents without an advisor.

When one spouse is the sole or primary breadwinner for a family, certain financial planning considerations become even more important. These components should be top of mind in your overall financial plan:

Life insurance: While life insurance is essential for many families, it’s even more important for families when most or all of their income stems from one person. If you are considering adding or increasing life insurance for yourself or another family member, ask yourself these questions:

  • Would your family be financially sound if the worst were to happen?
  • Does the spouse earning less also need protection?
  • If you have children, would your spouse’s Social Security survivor’s benefit be enough to cover childcare?
  • What about other things your spouse currently takes care of? Would you need to hire a house cleaner or begin paying for laundry service to replace the things a stay-at-home spouse does around the house?

An advisor can help you navigate these conversations to make sure you have adequate coverage in place.

Disability insurance: How would your family manage if you were to become disabled and unable to work? Your spouse may find employment but may be unable to bring in a similar income as you were making. This is where disability insurance kicks in. Keep in mind this income protection insurance typically does not replace 100% of your salary, so working with an advisor to make sure your family will be able to cover expenses is very important.

Emergency savings: I cannot emphasize this enough – any family or couple relying on a sole income needs a larger emergency fund. If you lose your job, you need to ensure you have liquid savings in place while you search for another. A financial advisor can help you to determine the correct amount to ensure your bills will be covered.

Goal planning and prioritization: Single-income families typically make less overall than dual-income families, which can make cash flow tighter and therefore potentially lower the rate of savings. Collaborating with a financial advisor can help to assure you’re on track to meet your short- and long-term goals or make the changes necessary to get there.

Tax planning: Working with a professional who understands your tax and income situation can help your family minimize liabilities whenever possible and make sure you are taking advantage of tax-efficient savings strategies.

Executive and stock compensation planning: Top-tier managers and key employees may be eligible for executive and stock compensation incentives. This can lead to a substantial increase in income. While this can be exciting and rewarding, it can also lead to more financial decisions. An advisor can help ensure you’re taking advantage of these benefits in a tax-efficient manner.

The above considerations are just a handful of ways a financial advisor can help protect families who rely on a primary or sole provider. Please reach out to your advisor to discuss the best options for your situation.

Note: The statistics shown above are by no means telling for all families in these situations. Each family is unique and structures household tasks and other items discussed differently. This article also focuses on heterosexual couples as this is where most of the research on breadwinner dynamics has been focused. All the planning needs outlined above are important for LGBTQ+ couples as well. For more information, click here.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third-party data and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Individuals should speak with qualified financial professional based on their circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-23-6103

Government Shutdown Averted for Now

Over the weekend, Congress passed legislation to enact a 45-day reprieve of any imminent government shutdown fears. However, this won’t get us through the end of the year.

In this episode of Buckingham Weekly Perspectives, Head of Investment Research Jared Kizer explores the impact of a government shutdown from a political and historical perspective, the near- and long-term risks from an investment strategy perspective, and three ways investors can manage this risk.

Source: Vanguard

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.